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I've enjoyed a sporadic virtual presence at Davos thanks to many media reports and online commentary. My highlight? This phrase stands out in Richard Edelman's summary:

“You cannot think about shareholder value without considering stakeholders. Any business that wants to endure must have trust and agreement of society for legitimacy." Ian Davis, McKinsey.

It's interesting to note that management consultants are focusing on more than the bottom line (perhaps it's inevitable). But it poses a challenge to PR consultants, because this should be our natural territory. What's the purpose of public relations? To help establish and maintain the social legitimacy of organisations in the public, private and not-for-profit sectors. We've recommended and conducted communications audits for many years; who's going to be first to conduct a legitimacy audit?

Welcome to the age of legitimacy. Prepare to move on from the age of marketing and branding.

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3 Responses to “Turning shares into stakes”

Richard,
Thanks for your note on my blog today. You’ll know my history, and so why I might have an opinion on the topic, but it seems to be one that PR people are too hesitant to get into.
If most business and selling is done based on relationships, then who is looking after all these ‘stakeholders’ who have stronger ties to the business than what they read in the papers or see on TV? Who is managing communications with employees, partners, suppliers, JV partners, agencies, regulators, unions, customers. etc?
We know McKinsey quite well. they and Accenture and Bain and IBM and others have all tried to get into this area… But its not natural for them. The traditional communication agencies have struggles too.
I call this ‘organisational communications’ and I am trying to convince the world that it needs more attention.
Wish me luck!
/df

For more that 20 years the industry has puzzled me on this issue. This is a natural turf few seek to tread.
When I came out of politics and went into commerce ( with Neville Wade as an excellent consultant acting in a consultancy rather than agency role) it never occurred to me that this was not the natural PR stamping ground.
Perhaps its because PR people do not see how organisations work and how they are and need to be influenced. Perhaps they consider this is the turf of internal specialists like salesmen, CFO’s, HR, Marketing and others and not the realm of PR.
But in learning how such professionals work is revealing.
I was lucky in that I worked for an enlightened employer which insisted that I trained alongside these people as part of the company in house training scheme run by Jack Scot-Lewis at Boss Group in the 1970’s (four days each month!).
Of course what one learns is that PR has a role in all these activities and, in participating, these people are amazed at the capability of public relations to assist them in their ambitions.
We beat off two recessions and grew by a factor of ten in a decade.
All that time there was a robust inter-departmental relationship with public relations involved in a very wide range of relationship management.
So, for the whole of the profession, the Edelman statement should be motherhood and apple pie rather than a profound insight.
Perhaps the time has come for academics and especially the profession’s institutions, to re-visit the ‘domains of practice’ issue and to get a wider perspective of PR practice.

I am a post-graduate public relations student. I have spent countless hours studying the theory behind public relations, trying to piece together what I believe the industry is all about.
If the role of public relations is to help establish and maintain the social legitimacy of organizations in the public, private and not-for-profit sectors, then McKinsey has proven that public relations is an incredibly important tool for any successful business.
From what I have learned thus far, many companies are unable to understand the full value and function of public relations. Public relations is often believed to be synonymous with publicity, therefore companies believe our only function is to get a client exposure in the media. Many public relations practitioners believe their jobs end here.
Public relations is about more than exposure, it is about relationship building. Positive relationships with the public create loyalty to a brand, protect a company in a competitive marketplace and offer a way to measure return on initiatives. Collaborative brainstorming between public relations consultants and management can foster ideas and growth in the matter of social legitimacy. Instead of thinking of management and public relations consultants as two competing professions, it is more beneficial to have them working together towards bottom line goals.
Moving into the age of legitimacy gives public relations an undeniable purpose in the business world and should foster the further growth of the profession in the corporate environment.